ii
The competitive advantage of velvet beans
as an economic agricultur
al commodity
EJD de Villiers
24012009
Mini-dissertation submitted in partial fulfillment of the
requirements for the degree Magister of Business
Administration at the Potchefstroom Campus of the North-West
University
Supervisor:
Prof PW Buys
ii
''A world in which people are food secure is a world where all people have access to sufficient food to sustain a healthy and productive life; and where food originates from well-integrated, competitive, and low-cost systems based on the sustainable use of natural resources which will require a rapid increase in productivity and an increase in social investments''
(Braun & Keyzer, 2006).
TITLE:
The competitive advantage of velvet beans as an economic agricultural commodity.
KEYWORDS:
Mucuna pruriens, competitive advantage, velvet beans, economical legume, agricultural commodity.
iii ACKNOWLEDGEMENTS
I hereby express my sincere gratitude and appreciation to the following persons for their support and co-operation throughout the completion of this study. Taking on and completing a project like this is almost impossible without their support, guidance and co-operation.
First and foremost, acknowledging my Heavenly Father, for granting me the time, the opportunity, as well as mental and physical ability to study; and for equipping me with the wisdom and strength needed to complete this study;
My loving, caring, and supportive wife Annatjie for encouragement throughout this mini-dissertation. Thank you for bearing with my frustrations and for being willing to accept and understand many days of loneliness at home — you were my heavenly inspiration for perseverance;
To my children, like so many other things, you were always there to help and support me, thank you for patience and willingness to accept my absence from your weekend activities, sorry for inconveniences caused;
Both my own parents and my mother–in-law for their advice, support and showing interest throughout this project;
Professor P.W. Buys, my supervisor, for accepting me as student and who has patiently provided me with excellent guidance, support and academic advice; and always allowing me to make common mistakes from start to finish of this study;
Elmarie Fourie, who introduced me to the velvet bean and its characteristics, which enlighten my entrepreneurial curiosity of searching for business opportunity by adopting this technology.
Lastly, to Christine Bronkhorst of the Ferdinand Postma Library at North West University for her enthusiastic support on the literature searches.
iv
ABSTRACT
The competitive advantage of velvet beans as an economic agricultural commodity. In the past 40 years, although food insecurity, poverty and environmental degradation persist, worldwide farmers have made considerable progress in increasing per capita food production whilst better understanding natural-resource management. Literature indicates that — in the decades to come — food demand will both grow and change for three reasons, namely increased numbers of people, increased income (people will have more purchasing power), and increased urbanisation (people will be more likely to adopt new diets containing animal protein and cereal). The world population is expected to increase to 8,9 billion by 2050, with 84% in the developing countries. Food insecurity and malnutrition are expected to persist despite progress on average per capita consumption of food.
As a complex system, and despite challenges, agriculture must produce simultaneously unprecedented abundance of food and unparalleled social concerns. As a business, agriculture requires high capital investments in land, facilities and production inputs; most often producing commodities of generally low unit value with thin profit margins, thereby forcing producers to strive for efficiency in all aspects of production. Therefore, it is of utmost importance that farmers should understand sustainable agriculture; where a more sustainable food-production system seeks to make the best use of nature’s goods and services whilst not being harmful to the environment. Sustainable agriculture should maximise the productivity of the land; should focus on locally adapted resource-conserving technologies which assist whole system redesign and large-scale adoption; and should aim to minimise the use of harmful non-renewable and fossil-fuel derived inputs.
Fertilisers have not replaced the function of organic matter and other management practices; but soil erosion and toxic waste rather did increase disproportionately along with increased agricultural production. This has led to a progressive decline in crop and land productivity as a result of soil degradation, water contamination, increasing problems of weed infestation, pests and diseases. Often the apparent absence of sustainable productive agricultural systems within the scope of commercial farmers is not because of the lack in technology or low yield potential of traditional varieties, but rather on account of the limited knowledge or lack of awareness on the part of farmers about sustainable production practices which function in harmony with their farming environment. As one of the keys to success the velvet bean — which can grow almost everywhere — is an example of the introduction of a simple regenerative component into a farming system, as well as boosting the capacity of a farmer for local adaptation of the technology. Integrating the natural
v
processes of nutrient cycling, nitrogen fixation and introducing natural enemies of pests into food production processes can contribute to minimising environmental damage and/or health of the farmer and the consumer. Using the knowledge and skills of farmers helps to improve their self-reliance and to solve a common management problem, such as social- and human-capital management.
The velvet bean is seen as an answer to the agricultural problem of low nutrient supply to the staple crop of maize. The bean creates ground cover, regenerates, fertilises the soil, controls weeds and adds organic matter and nutrients. In arid South Africa the crop is one of the strongest defences of the farmer against the harmful effects of El Niño — with the bean protecting the soil, holding water and fertilising the land with its leaves. With the velvet bean farmers can grow their own organic and inexpensive fertilisers. Commercial fertilisers are becoming more and more expensive and their benefit is decreasing because of a degrading soil resource base.
Furthermore, the rise in production costs makes total reliance on inorganic fertilisers more uneconomical for most growers in the agricultural sector; making it imperative for researchers to come up with options which increase the efficient use of fertiliser, and also to identify other nutrient sources — such as legumes — that are not capital intensive. The velvet-bean technique is known to researchers and farmers worldwide for a considerable amount of time, but not in our country. As the technique becomes better known to South African farmers, it can be considered in a broader sense as a modern way to add nitrogen to the soil; benefitting, amongst others, the subsequent crop. The velvet-bean approach has a window of opportunity which can lead to higher yields in crop production, decline in labour costs, crop diversification, as well as agro-processing — all resulting in improved food security for South Africa.
Adopting the velvet bean into a production system can benefit a farmer, by achieving maize yields of 3 t/ha–4 t/ha (similar to yields normally obtained with recommended levels of fertilisation at 130 kg N/ha) without applied nitrogen fertiliser or input for weeding. Velvet beans, as an intercrop, can provide more than 100 kg N/ha to the following crop. However, literature shows a declining trend over time for all systems, which suggests that additional external inputs (probably P and K
fertiliser) are required to achieve full sustainability. The adoption of the velvet bean in the South African maize industry would result in import savings of about 158 million tons of urea or about R591 billion/year.
Information presented in this mini-dissertation is considered to be the current state of knowledge on establishing, managing, and utilising the velvet bean as a legume in South Africa’s commodity
vi
market; with the belief that it will expand the use of the bean, and will enhance the benefits from its use.
vii
OPSOMMING
Die mededingende voordeel van fluweelboontjies as 'n ekonomiese landboukommoditeit. Alhoewel voedselonsekerheid, armoede en agteruitgang van die omgewing voortduur, het boere die wêreld oor die afgelope 40 jaar aansienlike vordering gemaak in verhoogde per capita voedselproduksie, ten midde van 'n beter begrip van hulle beskikbare natuurlike hulpbronne. Volgens literatuur gaan die vraag na voedsel in die volgende drie dekades bly groei weens drie redes: hoër bevolkingsgetalle, verhoogde inkomste wat groter koopkrag beteken en verstedeliking, wat meebring dat daar 'n groter geneigdheid gaan wees tot 'n vleis-en-graan dieet. Verder word voorspel dat die wêreldbevolking gaan groei tot 8,9 miljard in 2050, waar 84% in die ontwikkelende lande. Ten spyte van die vooruitgang op die gemiddelde per capita-verbruik van voedsel, sal voedselonsekerheid en wanvoeding na verwagting voortduur.
Ten spyte van ongekende sosiale kommer en vele uitdagings, moet landbou as 'n komplekse stelsel tergelykertyd 'n ongekende oorvloed van voedsel produseer. As 'n besigheid, vereis landbou hoë kapitale beleggings, die fasiliteite asook produksie-insette; waar kommoditeitsproduksie meestal lae eenheidswaardes het met gepaardgaande lae winsmarges. Gevolglik word produsente gedwing om in alle aspekte van produksie doeltreffendheid na te streef. Daarom is dit van die uiterste belang dat boere volhoubare landbou moet verstaan — waar 'n meer volhoubare voedselproduksiestelsel poog om die beste gebruik te maak van die natuur se goedere en dienste, terwyl die omgewing nie beskadig word nie. Verder moet volhoubare landbouproduktiwiteit maksimeer wat gefokus is op plaaslik-aangepaste hulpbronbewaringstegnologie. Dit word aangehelp deur die produksiestelsel te herontwerp deur die bevordering van 'n verminderde verbruik van nie-skadelike hernubare en fossielbrandstof-afgeleide insette.
In die proses het kunsmis nie net die funksie van organiese materiaal en ander bestuurspraktyke vervang nie; maar ook gronderosie en giftige afval buite verhouding verhoog tesame met verhoogde landbouproduksie. Dit het gelei tot 'n progressiewe afname in oes- en landproduktiwiteit wat te wyte is aan die agteruitgang van grond, waterbesoedeling en toenemende probleme van onkruidbesmetting, peste en siektes. Hierdie oënskynlike afwesigheid van volhoubare produktiewe landboustelsels binne die bestek van kommersiële boere is dikwels nie as gevolg van die gebrek aan tegnologie of 'n lae opbrengspotensiaal van tradisionele variëteite nie, maar eerder as gevolg van beperkte kennis of 'n gebrek aan bewustheid aan die boere se kant oor volhoubare produksiepraktyke wat nie in harmonie met hul boerderyomgewing funksioneer nie.
As een van die sleutels tot sukses is die fluweelboontjie, wat byna oral kan groei, 'n voorbeeld van die bekendstelling van 'n eenvoudige regeneratiewe komponent in 'n boerderystelsel as lokale
viii
aanpassing tot nuwe tegnologie. Met integrasie van die natuurlike prosesse van voedingstofsirkulering, stikstofbinding en natuurlike vyande van peste in voedselproduksieprosesse kan die fluweelboontjie bydra tot vermindering van skade aan die omgewing en/of die boer en die verbruiker se gesondheid. Met behulp van kennis en produksievaardighede kan boere gehelp word om hul selfvertroue te verbeter en gemeenskaplike bestuursprobleme op te los. Die fluweelboontjie word gesien as 'n antwoord op die landbouprobleem van lae voedingstowwe van mielies as stapelgewas.
Die fluweelboontjie bedek die grond, bemes die grond, beheer onkruid en berg organiese materiaal en voedingstowwe in die grond; sodoende kan 'n boontjieoes in dorre Suid-Afrika een van die boere se sterkste borswerings wees teen die nadelige gevolge van El Niño. Met die fluweelboontjie kan boere hul eie beskikbare en goedkoop kunsmis groei; dit terwyl kommersiële kunsmis besig om duurder te word en die gebruiksvoordeel daarvan besig is om te daal.
Die konstante stygings in produksiekoste maak die totale afhanklikheid van anorganiese kunsmis ook meer onekonomies vir die meeste produsente in die landbousektor. Dit noodsaak navorsers om opsies te ontwikkel wat doeltreffende gebruik van kunsmis verhoog, asook om ander bemestingstofbronne wat nie kapitaalintensief bekom kan word nie, te identifiseer. Die fluweelboontjietegniek is vir baie jare al wêreldwyd bekend aan navorsers en boere, maar nie in ons land nie. Sou dit beter bekend word aan Suid-Afrikaanse boere, kan dit gunstig oorweeg word in 'n breër sin as 'n moderne manier om stikstof tot die grond toe te voeg, wat op sy beurt weer die daaropvolgende oes kan bevoordeel. Die fluweelboontjiebenadering het 'n venster van geleentheid wat kan lei tot hoër opbrengste in die produksie van gewasse, daling in arbeidskoste, gewasdiversifikasie, sowel as landbouverwerking; alles wat kan lei tot die verbetering van voedselsekuriteit vir die land.
Die goedkeuring van die fluweelboontjie in 'n produksiestelsel kan 'n boer baat deur die bereiking van mielie-opbrengs van 3 t/ha–4 t/ha (soortgelyk aan die opbrengs gewoonlik verkry met aanbevole vlakke van bemesting op 130 kg N/ha) sonder toegepaste stikstofkunsmis of insette vir skoffel. Die voordeel is dat die fluweelboontjie, as 'n tussenverbouing, meer as 100 kg N/ha aan die daaropvolgende gewas kan voorsien. Literatuur toon egter 'n dalende opbrengstendens na verloop van tyd vir alle stelsels wat dus aandui dat verdere eksterne insette (waarskynlik P- en K-kunsmis) vereis word om volle volhoubaarheid te bereik. Aanvaarding van die fluweelboontjie binne die Suid-Afrikaanse mieliebedryf sal tot 'n besparing van sowat 158 miljoen ton ureum, of ongeveer R591 biljoen/jaar kan lei.
ix
Inligting vervat in hierdie mini-verhandeling word beskou as die huidige stand van kennis op die vestiging, bestuur en die benutting van die fluweel boontjie as 'n peulgewas in Suid-Afrika se kommoditeitsmark; verder word geglo dat die gebruik van die boontjie sal uit brei tesame met die verbetering van voordele van die gebruike daarvan.
x
TABLE OF CONTENTS
ACKNOWLEDGEMENTS iii ABSTRACT iv OPSOMMING vii TABLE OF CONTENTS xLIST OF FIGURES xiv
LIST OF TABLES xv
LIST OF ABBREVIATIONS xvi
CHAPTER 1: RESEARCH OVERVIEW 1
1. INTRODUCTION 1
1.1. Motivation to the study 2
1.1.1. Population growth 2
1.1.2. Agricultural sector 4
1.2. Competitive environment within South Africa 5
1.2.1. Agricultural sector 5
1.2.2. South African competitive business environment 6
1.2.3. Risk and price volatility 6
1.3. Business management tools 7
1.4. Problem statement 8
1.4.1. Escalating inputs costs of commodities 9
1.4.2. Health considerations and Parkinson's disease 9
1.4.3. Land reform and rural development 11
1.5. Motivation of the problem 12
1.6 Needs or research objective 13
1.6.1. Mucuna pruriens or the velvet bean as a solution to the above-mentioned
problems 13
1.7. Research method 14
1.7.1. Literature review 14
1.7.2. Empirical research 14
xi Table of Contents (continued)
CHAPTER 2: DEMANDS ON AGRICULTURE FOR NEW DEVELOPMENT 17
2.1. Introduction 17
2.1.1. Production possibilities and challenges 17
2.2. Whole system management and sustainability 19
2.3. Underlying economical and environmental drivers of change in agricultural
production systems 20
2.3.1. Factors that influence the profitability of farming systems 20 2.3.2. Dynamics and interaction of soil processes and decision-making on farming 21
2.3.3. Narratives of change 22
2.3.4. Factors influencing decision-making of farmers 23
2.3.5. Crop production profitability 24
2.3.6. Food security and increased yields 24
2.3.7. Other land-use options 25
2.3.8. Climate change 26
2.3.9. Long-term challenges 26
2.4. Industry development and future trends 27
2.5. Agricultural dimensions 30
2.6. Constraint factors influencing profitability of agricultural systems 32
2.7. Economics of crop diversification in agriculture 33
2.7.1. Economics of production 33
2.7.2. Crop diversification as effective tool in dealing with risk 34
2.8. Summary 37
CHAPTER 3: THE VELVET BEAN AND ASSESSING THE COMPETITIVE ENVIRONMENT 39
3.1. Introduction 39
3.1.1. Historical use 39
3.1.2. Characteristics of the velvet bean 41
3.1.3. Velvet bean as a means for sustainable soil use 46
3.2. Benefits of the velvet bean 47
3.2.1. As a crop 48
3.2.2. Forage crop 55
3.2.3. Medicinal potential 56
xii Table of Contents (continued)
3.4. SWOT analysis of the velvet bean 59
3.4.1. Introduction 59
3.5. Competitive environment according to Porter's five forces 62 3.5.1. Porter's generic strategies and competitive advantage 63
3.6. PEST analysis 66 3.6.1. Political 66 3.6.2. Economic (C-B analysis) 67 3.6.3. Social 68 3.6.4. Technology 68 3.7. Summary 69
CHAPTER 4: COMPETITIVE ADVANTAGE OF THE VELVET BEAN 71
4.1. Study background 71
4.2. Research method 71
4.3. Evaluating the main economic contributions of the velvet bean 72
4.3.1. Fertiliser prices 72
4.3.2. Nitrogen budget 73
4.3.3. As green manure or cover crop 74
4.3.4. Phosphorous budget 75
4.3.5. Values of velvet bean seed 76
4.3.6. Chemical measures 76
4.3.7. Increase in cash-flows owing to higher yields 77
4.4. Cost-benefit analysis of velvet beans compared to soya beans and dry beans 78 4.1.1. Net profit of crop farming (R/ha unless otherwise stated) 78
4.5. Discussion of results 81
4.5.1. Nitrogen contribution of the velvet bean and its value, as calculated
in Table 4.8 81
4.5.2. Comparative analysis between three legumes 83
4.6. Summary 85
CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS 87
5.1. Introduction 87
5.2. Why farmers do not accept legumes 87
5.3. Summary of research 88
xiii Table of Contents (continued)
5.3.2 Chapter 2 88
5.3.3 Chapter 3 90
5.3.4 Chapter 4 92
5.4. Limitations of the research 92
5.5. Scope for further research 93
5.6. Recommendations 93
5.7. Conclusion 97
xiv LIST OF FIGURES
Figure 2.1 Factors that influence the choice of a production system in relation to
the environment 23
Figure 3.1 Response of maize grain yield to inorganic FYM, green manure legumes
and their combination in Kakamega, western Kenya. 51
Figure 3.2 The three generic strategies 64
Figure 5.1 Velvet bean links to food security in a maize-based production system 94 Figure 5.2 Inverse relationship between production volumes and price 94
xv LIST OF TABLES
Table 3.1 Dry weight composition of the velvet bean 42
Table 3.2 Dry material yield (t/ha) of the velvet bean (Mucuna pruriens) achieved in a
rotational production system with maize 42
Table 3.3 Velvet bean seed mineral composition 43
Table 3.4 Analysis of velvet bean seed 44
Tabel 3.5 List of soil factors that attack the velvet bean 46
Table 3.6 Buckles et al. listed the following nutrients other than N in the aboveground
biomass of the velvet bean at four sites, northern Honduras (December, 1993) 53 Table 3.7 Research work done on the velvet bean as weed suppressor 54
Table 3.8 SWOT analysis of the velvet bean in table format 61
Table 4.1 Fertiliser prices 72
Table 4.2 Nitrogen contribution of the velvet bean as a crop 73
Table 4.3 Nitrogen contribution as green manure 74
Table 4.4 Foskor (2014) listed prices for fertiliser products and Buckles et al.
(1998) calculation 75
Table 4.5 Summary of herbicide costs for three commodities 76
Table 4.6 Derived commodity prices 77
Table 4.7 Average yields for summer crops. 77
Table 4.8 Production costs: Comparative analysis for three legumes 79 Table 5.1 Knowledge gaps related to the velvet bean for improving soil fertility 87
xvi LIST OF ABBREVIATIONS
BRICS — Brazil, Russia, India, China, South Africa
Ca — Calcium
C:N — Carbon:Nitrogen ratio C/B analysis — Cost-Benefit analysis
DM — Dry Material
FAO — Food and Agricultural Organization of the United Nations Foskor — Phosphate Corporation of South Africa
FYM — Farm Yard Manure
GDP — Gross Domestic Product
ICARDA — International Center for Agricultural Research in the Dry Areas IFAD — International Fund for Agricultural Development
INRM — integrated natural resource management
K — Potassium
L-dopa — Levodopa
L-tyrosine — Levotyrosine
Mg — Magnesium
N — Nitrogen
NDP — National Development Plan
NGP — New Growth Path
NPK — Nitrogen, Phosphate, Potassium
P — Phosphate
PEST — Political, Economic, Social, Technology SADC — Southern African Development Community SAFEX — South Africa Futures Exchange
SWOT — Strength, Weakness, Opportunity, Threats t/ha — tons per hectare
1
CHAPTER 1: RESEARCH OVERVIEW
1. INTRODUCTION
Kaur (2012) states that organic farming is here to stay; declaring that this type of farming excludes the large use of synthetic inputs while relying extensively on crop rotations, crop residues and mineral grade rock additives; simultaneously combined with a biological system of nutrient mobilisation and plant protection. The World Wildlife Fund-SA (2009) is concerned about the South African agricultural sector which is dependent on applying sustainable farming practices to protect its long-term productivity and to ensure profitable yields and the well-being of farmers. Kaur (2012) also emphasises that the world today is driven by the sole motive of making money. He refers to the use of cheaper and alternative methods of crop protection, by employing cost-effective low-cost alternatives with the advantage that harmful chemicals do not enter into the food we eat.
Kate (2010) maintains that, after the Second World War, farming with chemical and herbicide inputs together with high-yield crop varieties boosted farming outputs in both developed and developing countries. Ogot (2012) sees competition as a war of movement which forces a farmer to respond quickly to changing market needs, with competitive advantage as the aim; the end result being to increase market share and profitability performances. Kaur (2012) maintains that organic farming is the only way which can ensure simultaneous quality and quantity of crop production, can reduce production costs for the farmer and harmless food for the consumer, and can ensure a healthier nation and more manpower.
According to Bowman and Zilberman (2013) ― despite the shift of agriculture towards specialisation and mechanisation ― a renewed vocal contingent is drawing attention to the social, environmental and economic implications of agricultural activities. They request a new production model to be envisioned. Bowman and Zilberman (2013) further state that evidence such as a production shift should be related closely to the concepts of sustainable, multifunctional and organic agriculture; with the aim to maintain critical ecosystem services.
According to the National Agricultural Marketing Council (2013), South Africa's current supply of oilseeds for commercial use is on a par with current demand; soya bean usage is mainly for human consumption and animal feed, and a projected total demand increase of 35,8% from 2012 to 2013 is indicated. Grain SA (2014) indicates that soya beans are the world's most important oilseed, accounting for double the volume of any of the eight most important oilseeds on the world market. In South Africa the most important oilseeds are soya and sunflower. PULA IMVULA (2011) highlights
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that soya beans can also fix nitrogen, which is available as organic nitrogen to plants; and mentions that the value of imported seed oil amounts to R3,1 billion/annum.
1.1. Motivation to the study
Ostadi et al. (2013) assert that globalisation is a new circumstance which has limited economic development owing to eliminated trading limits; adding that when developing competitive capacity, the competitive advantage, national economic capacity and global market structures have to be evaluated. Njuguna (2009) states that, as determinants of business success, performance growth in competitive advantage and distinctive competence is the result of business sustainability; and pleads for business studies to be focussed on characteristics that are unique, adding value for the customer, and are transferable to different industrial settings.
Bechdol et al. (2010) suggest the pursuit of increased productivity will be a critical driver for change for diligent crop producers. They further declare that higher demand forces producers to increase yields at increased rates. The availability of new productive lands is limited, though, and therefore new technologies will be dependent both on economics of production and the willingness of society to accept such new technologies. Bechdol et al. (2010) list the four dominant forces reshaping crop production as growing and diversified demand, technology, resource availability, and societal influences.
1.1.1. Population growth
According to Go et al. (2013) the planning of a government lies in understanding demographic trends which are relatively stable over time, and which can be forecasted by a representation of the three drivers of population change namely fertility, mortality, and migration. Go et al. (2013) add that since 2010 the sub-Saharan region has experienced migration flows from within the continent to a country such as South Africa. These migrations are driven by changing economic, political and social factors which can result in large-scale changes in sheer numbers and directionality.
The World Wildlife Fund-SA (2009) states that the South African population increases by 2% per year. In consequence food production has to increase twofold, or production should be increased while using the same or fewer natural resources. Go et al. (2013) also comment that average life expectancy in South Africa has improved since 1960 and that this trend will continue.
Climate change
McCarthy et al. (2011) maintain that the global community faces challenges such as climate change and food security; forcing agricultural production to improve with regard to production
3
systems as a means of food security and to improve income. Benin (2006) proclaims that domestic agriculture is the main source of food, which makes it a highly sophisticated and successful sector that is commercially orientated, capital intensive, and generally produces surpluses. Furthermore, McCarthy et al. (2011) state that the improvement of resilient production systems is essential for adapting to climate change; because of reducing crop productivities owing to adverse changes. Baine (2013) indicates his concern about the effect of climate change on South Africa, which has half the average global rainfall. With 98% of water systems in crisis; farming and eating habits are changing, with decreased farmer profitability.
Benin (2006) states that, although agronomic and economic studies have been done on the impact of climate change, it is unclear what adaptations are available to Africa and how the continent will be affected.
Lifestyle and health awareness
According to Crosswaite (2013) people are more interested lately in their holistic health and are increasingly encouraged to manage proactively the condition of their bodies. They are enabled to feed their sense of empowerment and engagement and a focus on the health experience is emerging. Alano (2014) argues that nowadays the world is busier with consumers continuing to change into eco-explorers; aspiring to back-to-nature living as reflected in their choices of lifestyle, healthier food and anti-stress methods.
According to Baine (2013) the population is growing and getting wealthier which adds to food security concerns; contributing to a rising demand for animal and fish proteins, fresh fruit and vegetables. Bradshaw (2008) states that sustainable environmental management needs more attention in terms of sustainable agricultural practises. The efforts of health information system improvement should be continued by linking health and development with better water, nutrition, and food security. Alano (2014) concludes that customers with a clinical disorder such as Parkinson's disease will turn to a diet which promotes health benefits such as improved cholesterol levels, better digestive and increased energy levels.
Food production practices
MarcRobbins (2014) states that food contamination by pesticides, hormones, and chemicals allows us to have toxic foods; the result being that many suffer from obesity, diabetes and more chronic illnesses than ever. MarcRobbins (2014) also declares that a revolution is brewing beneath the surface with more and more people finding their voices and taking action in the belief that the
4
quality of food and the quality of their lives are linked; noting the growing demand for healthier food which is also becoming a political force where more people say 'no' to foods which lead to illnesses. 1.1.2. Agricultural sector
Karuna (2011) comments that agriculture has been associated with the production of basic food crops and is seen as a backbone of an economy and the population of a country; highlighting its role as a source of livelihood, supplying food and fodder, contributes to foreign exchange resources, offering employment opportunities, and can be the basis of economic development by providing necessary capital for other sector developments. According to Business Day Live (2014) agriculture in South Africa contributes 3% to gross domestic product (GDP) and 7% to formal employment. With strong economic links it allows the agro-industrial sector to contribute 12% to the local GDP and 6,5% of total exports.
According to the Department of Agriculture, Forestry and Fisheries (2012) farming remains important to the economy with 638 000 people formally employed while an estimated 8,5 million jobs are dependent on agriculture. The sector is considered to be capable to create jobs, therefore, it is the key focus of the New Growth Plan of the Government which aims to create 5 million jobs by 2020.
The Buro for Food and Agricultural Policy (2013) states that agriculture sustained its growth in 2012, fuelled by higher commodity prices and field crop production volumes. The Buro indicates that, with 2013 as baseline, the annual growth rate compared to the prior decade was lower because the marginal prices of commodities were protected and characterised narrower profit margins; with fierce competition among local market participants and international players, adding that narrower profit margins will be a challenge for the primary industry and the complete food value chains. The Buro for Food and Agricultural Policy (2013) suggests that the adoption of technology and sustainable farming practices can boost competitiveness, especially because South Africa is the main maize producer in the Southern African Development Community (SADC).
Agricultural land use systems
Kassam et al. (2010) mention that the quest of agriculture to sustainability has coincided with rises in food costs, energy and production inputs, climate change, water scarcity, degradation of ecosystem services and biodiversity, and the global recession; adding that additional pressure is created by the demand of population growth on agricultural products, produced within a compatible ecosystem service. Vanlauwe et al. (2013) declare that principles of conservation agriculture had
5
originated with large-scale farmers in Brazil during the 1970s and have since spread to other countries.
Altieri (2002) emphasises that the improvement of whole farming systems should be based on the socioeconomic needs and environmental circumstances of farmers; although it might be a sensible avenue for solving the problems of poverty, food insecurity and environmental degradation. According to Vanlauwe et al. (2013) conservation agriculture is defined around the three principles of minimum tillage, soil surface cover, and diversified crop rotations; and they suggest that conservation agriculture should be promoted to help intensify sustainable farming systems within sub-Saharan Africa.
1.2. Competitive environment within South Africa
Wells (2014) defines the competitive environment as a dynamic external system in which a business competes and functions; stating that the higher availability of a similar product within the market place indicates more competition. Well (2014) asserts that the primary determinant of profitability is the appeal of the operational industry and the secondary determinant is the position of the firm within that industry; adding that either direct or indirect competitors motivate a business to be innovative in striving to outdo the indirect competitor.
1.2.1. Agricultural sector
According to Esterhuizen (2006) globalisation has caused agribusinesses to compete in domestic and foreign markets, thereby to introduce new customers and markets. The issue of competitiveness and comparative advantage has become important and implicates both society and business organisations. The Department of Agriculture, Forestry and Fisheries (2012) states that — over the past decade — the concept of competitiveness of the South African agribusiness sector has been redefined radically by policy and practice, where initiatives have been implemented to deregulate and liberalise further the sector to help promoting a free-market approach.
Esterhuizen (2006) proclaims that, at organisational level for sustainable financial relevancy and growth, the production and marketing of competitive products and services should be in an economical sustainable manner. According to the Department of Agriculture, Forestry and Fisheries (2012) free trade agreements reduced import protection. Although a harsh environment, the global regulatory environment presents the South African agribusiness with no other choice but to compete.
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1.2.2. South African competitive business environment
SAinfo (2013) comments that South Africa is one of the most sophisticated and diverse emerging markets located as a continental gateway to Africa, with key investment market opportunities that lies within its borders. According to the New Zealand High Commission (2010) the South African Reserve Bank maintains independence from the government and the programme of inflation targeting, stabilises real interest rate, and encourages foreign investments, all showing good results with the currency remaining at competitive levels.
SAinfo (2013) adds that the country offers highly developed first-world economic infrastructure, an advanced and broad-based industrial and productive economy, and a disciplined fiscal framework which all aims at increasing the outward orientation of the the economy; with economic reforms given rise to macro-economic stability. As far as competitiveness is concerned, Walter Kluwer TAA
Ltd (2013) states that South Africa was ranked 52nd out of 144 countries in the Global Competitiveness Index of the World Economic Forum for 2012; the highest ranked country in sub-Saharan Africa, claiming third place among the BRICS countries.
SAinfo (2013) further indicates that the key challenges of poverty, unemployment and inequality are still being faced; averring that the South African government is therefore trying to address these through two key economic frameworks, namely New Growth Path (NGP) and the Industrial Policy Action Plan. Walters Kluwer TAA Ltd (2013) also declares that the South African government provides incentives for value-added manufacturing projects, supporting industrial innovation, and provides an enabling environment for small business development.
1.2.3. Risk and price volatility
Kahan (2013) asserts that — as farmers evolve from subsistence farming to commercial farming — their decision-making is influenced by many unpredictable factors and is therefore more exposed to business risk. He also mentions the importance of understanding such risk and having the skills to manage it. The Food and Agricultural Organization of the United Nations (FAO) (2011) indicates that the supply side has scarce resource challenges as well as the decline in yield rates of some commodities; which possess substantial challenges to food being produced at affordable prices, further increasing food price volatility because of the strong link between agricultural and energy markets.
Kahn (2013) lists sources of risk as climatic, equipment breakdowns, borrowing money, and risk related to family wealth and the supply of labour. FAO (2011) adds that price volatility is
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specific, and depends on the commodity being considered, the specific policy, and exchange rates; all affecting the circumstanced price transmissions.
Kahan (2013) summarises by pointing out that the attitude of farmers towards risk differs greatly, often related to financial ability. Risk management can be classified as
i) risk-averse, ii) risk-takers, and iii) risk-neutral.
Kahan (2013) further mentions that good risk management decisions, such as choice of a crop, depend on accurate information which requires reliable data. FAO (2011) concludes that crop production has the potential to be increased through new technologies, improved extension, and/or by reducing losses in the supply chain.
1.3. Business management tools
Cohn and Hough (2008) state that the SWOT analysis is an essential tool for determining the position of a business entity in its market; helping to influence the business strategy used to capitalise on the resources of the company, opportunities and defences against competitive threats. Cohn and Hough also are of the opinion that the SWOT analysis scrutinises current and future situations within the market — the goal being to build as much as possible on internal environmental strengths and weaknesses — while reducing external environmental opportunities and threats; helping a business with a prepared plan to consider the option to attack a competitive weakness rather than a competitive advantage.
According to Jurevicious (2013) the aim of PEST is to understand better the overall surrounding of the business; to uncover the current external affecting factors, to identify those factors which can change in the future, and to exploit the opportunities or to guard against threats in a better way than competitors. According to Value Based Management (2014), for sustainable operations a PEST
analysis can be used as a strategic framework and can play an important role in the value creation opportunity as a business strategy; concluding that macro-economic factors can differ per continent, country or region and should therefore normally be performed per country.
Jurevicious (2013) describes the elements as Political (such as minimum wages, tariffs and market regulations), Economic (interest rates and fiscal policy, while the economic climate dictates how consumers, suppliers and other business stakeholders behave), Society (family, friends, media, and population), and Technology (genetically modified seeds, and new production practices).
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Despande (2008) considers a farming entity as a business entity as well and therefore believes Porter's model — to help analyse the external environment of the industry — is one of the best frameworks to create a complete picture thereof. He refers to the model indicating that — for any particular business unit ― one internal force can determine the extent of impact of the other exposed four external forces. According to Boundless (2014) Porter's five forces draw on qualitative industrial business economics, and derives that the five forces determine the competitive intensity and attractiveness of a market; comparing profitability of the business and its position at the line of business.
Boundless (2014) considers the five forces as threat of new entrants, bargaining power of buyers (outputs), bargaining power of suppliers (inputs), threat of substitute product of services, and rivalry among existing competitors; and notes that the strategic implications of competitive forces indicated that the competitive environment is unattractive when rivalry is very strong, entry barriers are low, competition from substitutes is strong, and if suppliers and customers have considerable bargaining power. Rachapila and Jansirisak (2013) assert that inability to respond to rapid external changes is the cause of business recession; suggesting the utilisation of competitive forces to inspect competency and environmental instability, and designing a defensive plan against these rapid changes.
Deshpande (2008) further mentions that the agriculture specialists of the United Nations (International Fund for Agricultural Development [IFAD]) ran the Agricultural Marketing Systems Programme in Tanzania. This is a good example of the five forces model of Porter used as a basis for structuring poverty alleviation. Dobaria et al. (2011) state that the development of Porter's Generic Strategies of the five competitive forces has an impact on the profit of an organisation; thus new strategies have to be developed by enabling superior shareholder value to combat the forces strategically better than those of a rival.
Dobaria et al. (2011) label the three generic strategies as cost leadership, differentiation, and market focus or niche marketing. However, QuickMBA (2010a) warns that having more than one single generic strategy can leave a business at the risk of being stuck in the middle and not achieving a competitive advantage. Because customers often seek multidimensional satisfactions, each chosen generic strategy should have an attribute that serves as a defence against competitive forces.
1.4. Problem statement
9 1.4.1. Escalating inputs costs of commodities
According to Van Schalkwyk (2008) food prices are expected to rise owing to smaller plantings from farmers as a consequence of escalating input costs. Kate (2010) states that the spurt in prices of fertiliser and fuel (46,8% and 60,7% respectively) has increased farm requisites by 21,6%, with overall farm debt growing by 18,5% — which accounts for almost 25,3% of the total farm assets used as collateral by farmers. Van Schalkwyk (2008) adds that the report of the South African Bureau for Food and Agricultural Policy has indicated an increase in input costs. Driven by oil prices, fertiliser prices have increased by as much as 400% since 2006, with combined input costs which have risen by 53% in 2008 and even more in 2009. Kate (2010) continues by stating that production costs have increased to beyond the value of farms, which indicates that few farmers will be able to survive crop failures. These higher production costs also have contributed to inflating food prices.
Based on the aforegoing, Van Schalkwyk (2008) notes that escalating pressure on consumer expenditure and constraints on supplies will slow South Africa's economic growth; increasing input costs make it increasingly more difficult to farm. Kate (2010) concludes that the current crisis of higher production costs are governed by factors such as industrialisation of the food production system, indebted countries switching from food crops to cash crops, monopolistic control of value chains by multinational corporations, neglected natural resources, effects of climate change on droughts and crop failures, and the shift from food production to biofuels.
1.4.2. Health considerations and Parkinson's disease
Consumers' food safety
Grace Communications Foundation (2014) defines sustainable agriculture as a process of farming techniques where food, plant and/or animal products are produced while the environment, public health, human communities, and animal welfare are protected without compromising the ability of future generations to do the same. With food security being described as a 'crisis' in Africa, the FAO
(2009) asserts that universal recognition of food safety is a public health priority and requires a holistic approach from production to consumption; adding that consumers are at risk owing to aspects of production processes which are exposed to a wide variety of agents within the food chain.
According to Brownstein (2014) studies have linked pesticides with the development of Parkinson's disease — a new study has found the dopamine processing gene ALDH as being susceptible to inhibition from pesticides. He adds that researchers have demonstrated that — for people with
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certain genes —exposure to pesticides may increase the risk of developing Parkinson's disease two to six times more. Brownstein (2014) concludes that pesticides appear to trigger an effect on the ALDH enzymes which are all involved in processing the brain chemical dopamine. The FAO
(2009) furthermore believes that farmers should apply good codes of production practices; adapting specific production and farming systems to help obtain stakeholder commitment to the food production quality assurance process.
Parkinson's disease
The Parkinson's Disease Foundation (2014) defines the disease as a chronic and progressive movement disorder with symptoms that continue and worsen over time. The cause is unknown, but there is treatment available to manage symptoms, such as medication and surgery. According to the Foundation scientific evidence shows that the hallmark sign of Parkinson's disease are clumps of the protein alpha-synuclein — called Lewy bodies — whose intestines have dopamine cells, causing non-motor symptoms experienced by people with the disease. The National Institute of Neurological Disorders and Stroke (2014) maintains that a person with Parkinson's disease has abnormally low dopamine levels owing to dopaminergic neurons which have died. With low dopamine levels people find it harder to get things done or to control movement.
According to the Institute there is no cure at present, but a variety of medications can provide dramatic relief from the symptoms. Patients usually are supplied with levodopa combined with carbidopa, which delays the conversion of levodopa into dopamine until reaching the brain. The Institute further explains that, although levodopa helps about three-quarters of the cases, not all symptoms respond equally to the drug. According to Feedipedia (2014) the velvet bean has three main uses, namely food, feed and as environmental service. With edible young leaves, pods and seeds the bean is used as cover crop and feed legume. Feedipedia adds that pods and seeds can be ground into a rich protein meal and be fed to both ruminants and, in limited amount, to monogastrics. Bioweb (2011) states that the velvet bean is high in protein, carbohydrates, lipids, fibre, minerals and rich in novel alkaloids, saponins, and sterols.
Bioweb (2011) adds that, although seed extracts contain high concentrations of L-dopa (3,4-Dihydroxy-L-phenylalanine), concentrations of serotonin have also been found in the pods, leaves and fruits. The Herbal Healer Academy (2012) states that L-dopa is made from L-tyrosine — an amino acid naturally occurring in the human body — which is the immediate precursor of and converted to dopamine in the brain; which acts as a neurotransmitter that promotes enjoyment and interest in life. The Herbal Healer Academy adds that the most beneficial medical use of this supplement is in the treatment of the degenerative disorder of Parkinson's disease.
11 1.4.3. Land reform and rural development
About SA (2012) states that land is seen as a catalyst for poverty alleviation, job creation, food security, and entrepreneurship; therefore the Comprehensive Rural Development Programme (Act) is aimed at reducing poverty by creating vibrant, equitable and sustainable rural communities. According to Waeterloos (2013) the demise of many small commercial farming units is owing to the hard work required to grow crops in the harsh environment of South Africa which is predominantly suited to livestock production.
About SA (2012) says that the three key principles on which the Act is based are i) de-racialising of the rural economy for shared and sustained growth, ii) democratic and equitable land allocation and use, and
iii) strict production disciplines that guarantees food security.
Waeterloos (2013) refers to the World Bank (2008) who emphasised the potential leverage that rural economies can provide in reducing poverty; by integrating opportunities of higher segments in the value chain and the expansion of agrobusiness or non-farm products and services, through re-use of fallow land and further development of the agro-industry.
Manjengwa (2006) indicates that natural resources management in Southern African countries has been largely technocratic; referring to land degradation being identified as fertile topsoil erosion, deforestation and desertification which are all critical environmental issues. Waeterloos (2013) adds that a number of private farms have been integrated into corporate farms where about 5% of the enterprises are responsible for half of the overall commercial production; maintaining that production has switched from grains to export commodities such as processed agricultural products. Manjengwa (2006) further states that the dominant paradigm of environmental degradation refers to land degradation and soil erosion caused by overcrowding in communal areas and inappropriate farming methods on commercial farms; indicating a prevailing solution as the application of new agricultural technologies such as new crop varieties.
Manjengwa (2006) concludes by saying that sustainable agriculture should focus on the trend of soil protection, biodiversity and consumer health with the imperative to be profitable — while being subjected to the same economic pressures which affects the complexes external agricultural environments worldwide. By analysing the above-mentioned trends a farmer can display the ability to earn price premiums on a commodity such as the velvet bean.
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Primary question
In the light of all the aforementioned, the primary research question can be formulated as follows: As a legume, does the velvet bean have a viable economic competitive advantage within the South African agriculture?
Secondary question
To address and answer this question the following secondary question can be formulated:
Which external market forces affect the (financial) viability of the velvet bean to obtain a competitive advantage in South Africa (i.e. SWOT and PEST)?
1.5. Motivation of the problem
According to Cherry (2014) motivation is the goal-orientated process that initiates, guides and maintains behaviour of a person; either extrinsic or intrinsic actions that involves biological, emotional, social and cognitive forces, and consists of the major components of activation, persistence and intensity. According to Van Niekerk (2013) about 8,5 million people are dependent on agriculture in South Africa, therefore the agricultural sector has been identified through the NGP
of the government as a sector with significant potential to create jobs in smallholder schemes and agro-processing. With this in mind, the government has embarked in stimulating production by smallholders, with a special focus on rural areas and the former homelands.
Anon. (2011) argues that the agricultural policy and practice in South Africa has changed dramatically over the past few years. These require farm producers and agribusiness to position themselves as business-driven competitors in a less controlled 'free market' global trading environment. According to Anon. (2011) this new environment demands the reality for value-adding interaction within the supply chain; to meet these imposed challenges. Agricultural economics will have an important contribution pinpointing opportunities of the supply chain and the financial viability of new commodities entering the market, with the emphasis on the competitive advantage elements.
This study aims to contribute to the literature by disclosing some of the underlying roots of competitiveness and profitability of the velvet bean in South Africa's agriculture industry, by
i) creating a cost advantage and revenue opportunity for legume farmers through crop diversification;
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ii) addressing and contributing to health concerns of consumers through healthier food production practises and in supplying a medicinal substance needed in the treatment of Parkinson's disease; and
iii) supporting and contributing to the land-reform issue in the country by allowing for lower-cost production practises and offering an alternative legume to cash cropping.
1.6 Needs or research objective
1.6.1. Mucuna pruriens or the velvet bean as a solution to the above-mentioned problems According to McGrath (2001) farmers in Guatemala and Honduras have discovered that the velvet bean could be used as a green manure to help rebuild soils quickly; declaring that the velvet bean is able to produce 150 kg of nitrogen, as well as contributing about 35 ton/ha of organic matter as natural compost in the soil. According to Ceballos et al. (2012), while presently being used as a traditional technology, the velvet bean is becoming better known; described and evaluated by researchers both in experimental fields and in parcels of farmers in various tropical regions of Latin America and Africa.
McGrath (2001) also states that a crop such as maize can benefit from released fixed nitrogen being available as a fertiliser, thereby helping to regenerate local economies by benefitting farm families who have adopted the practise of sustainable agriculture. McGrath (2001) further maintains that the velvet bean has been introduced to promote soil and water conservation practices, adding that the velvet bean is used in cropping systems — which include maize and soya beans — where the yield of maize has increased by 47% and that of soya beans by 83%. McGrath (2001) concludes that the 'magic' of the velvet bean is also appreciated in Benin, Africa which reports that maize yields have more than doubled.
According to the Tropical Plant database (2012) the velvet bean is an annual climbing vine, growing 3 m–18 m in height. It is indigenous to India and is known to be used in the traditional Ayurveda system for thousands of years. Tropical Plant database (2012) indicates that different countries use the velvet bean for different ailments such as treating pain, diabetes, infertility, to calm nerves, to lower cholesterol and as blood purifier.
To answer the research question formulated in Section 1.3, the main objective of this study is to analyse whether agriculture understands, and how it interprets the internal and external competitive environment of the velvet bean as an economic viable legume. The study consists of two main focus areas:
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As part of the 5C analysis, the focus is on the Climate section (PEST) where the external business environment is analysed to understand the existing South African agricultural sector; and by what method the velvet bean can viably enter this environment as a competitive new legume.
A SWOT analysis is done by examining the concerns, challenges and developments in the South African agricultural sector and in what way the local commodity market is affected by these concerns, challenges and developments; to access the competitive advantage of the velvet bean in facing these factors.
1.7. Research method
To achieve the above-mentioned objectives of this study, a theoretical study of recent literature is required. According to Business Dictionary (2014), exploratory research is described as the investigation into a problem and/or situation to provide insights to a researcher with more detail where a small amount of information already exists. A variety of methods such as trial studies, interviews and group discussions may be used for the purpose of gaining that information.
1.7.1. Literature review
The research aims to provide an exploratory analysis of the internal and external environment for agricultural commodities; consisting of a literature study which is presented as a case study. During the literature study, the focus is on the competitive environment in which agriculture is operating, to identify and to highlight economic opportunity as well as financial viability of the velvet bean as a new commodity for agriculture in South Africa. Information on a PEST and a SWOT analysis, focusing mainly on the external environments of production, is gathered from textbooks and scientific journals, the Internet and other relevant publications.
1.7.2. Empirical research
The second phase of the study consists of creating various financial models where the information gathered on the biological nitrogen fixing capabilities of the velvet bean is analysed economically. Furthermore, a comparative production cost analysis between three legume species is done; highlighting the economic benefit of the velvet bean.
1.8. Chapter overview
This study follows the mini-dissertation route in accordance with the guidelines of the Potchefstroom Business School at the North-West University and is divided into five chapters.
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Chapter 1 ― Research overview
This chapter addresses the background to the study and motivation of the topic actuality, demonstrating the relevance and need for the suggested study. It highlights the competitive environment of agriculture and the commodity market opportunities in South Africa. This is followed by the problem statement, research question and objectives; all setting the foundation for the rest of the study. Finally, the research methodology is explained briefly and summarised.
Chapter 2 ― Demands on agriculture for new development
This chapter reviews literature where the competitiveness, industry concerns, challenges and development of agriculture are examined.
Chapter 3 ― Velvet bean and assessing the competitive environment
This chapter reviews literature on the velvet bean and its uses within agriculture. Literature also explains the other tools that are used in the research:
- SWOT ― Strength, Weakness, Opportunities, and Threats to highlight the factors considered
for the internal and external competitiveness of the velvet bean;
- PEST ― Political, Economic, Social, and Technology and the attributes to help shape the
competitive advantage environment for new products.
This chapter further reveals the economic development within agriculture as well as a financial viability analysis of the velvet bean.
Chapter 4 ― Comparative advantage of the velvet bean
This chapter sets out cost-benefit calculations of the velvet bean as well as a comparative analysis between the velvet bean and two other legumes. An analysis of the answers gained evaluates the above-mentioned data, identifying the key success factors to contribute in evaluating the economic value of the velvet bean.
Chapter 5 ― Summary, conclusion and recommendations
Chapter 5 deals with the competitive advantage of the velvet bean entering the market. The information gathered from the literature is evaluated in conjunction with results from the overall study, together with knowledge gained during interviews. Lastly, conclusions, recommendations and scope for future research are made and limitations of the study are addressed.
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"The thing with farming is that it's one of the few professions where you have a multitude of uncontrollable variables. You can't ever predict the weather from year to year or even day to day, so it's high risk. Sometimes it's scary to want to invest more into land or overextend yourself" — Windham focus group participant
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CHAPTER 2: DEMANDS ON AGRICULTURE FOR NEW DEVELOPMENT
2.1. Introduction
The purpose of this chapter is to give the reader an overview of the development within agriculture. The stated literature refers to economic drivers of production changes, the challenges faced by producers to improve productivity and the factors that influence profitability. Altieri and Funes-Monzonte (2012) remark that the three elements of sovereignty should be displayed and enhanced in agriculture’s production efforts; namely,
i) reaching food sovereignty (the right of a consumer to have access to a sufficient quantity and quality of safe, nutritious and culturally appropriate food, enabling a sustainable healthy life), ii) energy sovereignty (having sufficient energy within ecological limits from appropriate
sustainable sources), and
iii) technological sovereignty (having the capacity to achieve food and energy sovereignty through the environmental services which are derived from existing resources in reaching agro-biodiversity).
According to Bowman and Zilberman (2013) the twentieth century brought changes in the agricultural economics of developing countries dominated by operational production methods, increased labour costs, and changes in agricultural policies. They add that improvement in commodity productivity and a move to more capital- and technology-intensive practices can play a part in heterogeneous production within Africa.
2.1.1. Production possibilities and challenges
African context
According to Altieri (2002) World Trade Organisation policies forced developing countries into open markets and allowed dumping of overproduction from developed countries at dis-incentive prices; this at the cost of local farming producers who mostly lacked the benefits of mainstream agricultural technologies. According to the United Nations Development Programme (UNDP, 2008) the East Africa economies attract attention owing to a variety of opportunities; referring to nature-based products whose potential could be tapped to raise incomes and providing alternatives.
To benefit, Altieri (2002) declares that a natural-resource management approach can address poverty alleviation, food security and self-reliance, ecological management of productive resources, the empowerment of rural communities, and the establishment of supportive policies. The UNDP
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(2008) mentions that this allows for significant potential in production, processing and marketing of cash crops, such as medicinal plants, through rain-fed and irrigation production systems.
The Economic Commission for Africa (2013) holds that challenges such as a lack of production credit, low product commercialisation, low productivity, inappropriate production technologies, and the degradation of ecosystems face the production, processing and marketing of dry-land products; leaving African countries vulnerable to commodity price fluctuations. The UNDP (2008) believes that the existence of key supporting policies can open up space for new development; also that the right policies can help serve as a launching pad for long-term diversification and competitiveness of new commodities in Africa.
South African context
According to South Africa.info (2012) the country has a dual agricultural economy consisting of a well-developed commercial sector as well as a subsistence-based production sector. South Africa.info states that the country has seven major agro-ecological zones consisting from arid to semi-arid in the western areas and subhumid to subtropical humid conditions in the east. South Africa.info (2014) documents that the climatic regions allows for 12% of the surface of the country to be arable, while unreliable rainfalls accounts for only 22% of the available arable land considered by commodity farmers as high-potential land.
According to Hannon (2012) South Africa faces a future of uncertain land reforms and increasing pressure for expansion, although the country is agriculturally the most productive on the continent. Meyer (2014) argues that South Africa will continue to play a leading role in the African agriculture landscape, mentioning that this notion will depend on internal perspectives and its agriculture stakeholders.
Hannon (2012) also mentions that cereals and grains, of which maize dominates, are the mainstay of South African farming and account for more than 60% of farmed acreage, of which about 16,7 million ha are classified as potential arable land. AGINFO TRADING (2013) rates agricultural challenges and opportunities as issues ranging from market development, assessing global and domestic markets, understanding new value chains, and the upliftment of the rural poor and information provision.
Meyer (2014) remarks that climate change is becoming a greater inhibitor of yields and plays an ever-increasing role in crop choices and planting decisions; reality is that a challenge also offer an opportunity. According to Esterhuizen (2006), when a society fails in achieving competitive advantage, that society can have a low standard of living and can jeopardise their independent
